Smith & Wesson Earnings Fail to Impress Investors

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Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported its fiscal first-quarter financial results after the markets closed on Thursday. The company beat on the top and bottom lines, practically doubling its earnings year over year, but this was not enough for investors.

The company said that it had $0.62 in earnings per share (EPS) on $207 million in revenue, compared to consensus estimates of $0.53 in EPS on revenue of $196.7 million. In the same period of last year, Smith & Wesson posted EPS of $0.32 and $147.8 million in revenue.

In terms of the outlook for coming quarter, the company expects to have $0.53 to $0.57 in EPS and $220 million to $230 million in revenue. The consensus estimates call for EPS of $0.53 and $198.16 million in revenue for this period.

On the books, Smith & Wesson cash and cash equivalents totaled $215 million at the end of the quarter, up from $191 million at the end of the previous quarter.

James Debney, president and CEO, commented on earnings:

We are very pleased with our first quarter results, which exceeded our financial guidance. We believe that higher revenue was driven by strong consumer demand as reflected in adjusted background checks from the National Instant Criminal Background Check System (NICS) as well as our own market share gains.  During the quarter, we announced the acquisition of Taylor Brands and Crimson Trace, two accretive acquisitions, making strong in-roads on our strategy to become a leader in the market for shooting, hunting, and rugged outdoor enthusiasts. These acquisitions, which further expand our presence in the markets for outdoor products and accessories, were completed early in the second quarter.  Based upon that timing, as well as our performance for the first quarter and our revised outlook for the remainder of fiscal 2017, we are raising our full year revenue and net income guidance.

Shares of Smith & Wesson were trading down about 6% at $27.70 on Friday. The stock has a consensus analyst price target of $31.50 and a 52-week trading range of $16.33 to $31.19.